Correlation Between Philip Morris and YY
Can any of the company-specific risk be diversified away by investing in both Philip Morris and YY at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Philip Morris and YY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philip Morris International and YY Inc Class, you can compare the effects of market volatilities on Philip Morris and YY and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Philip Morris with a short position of YY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and YY.
Diversification Opportunities for Philip Morris and YY
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Philip and YY is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and YY Inc Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Inc Class and Philip Morris is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Philip Morris International are associated (or correlated) with YY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Inc Class has no effect on the direction of Philip Morris i.e., Philip Morris and YY go up and down completely randomly.
Pair Corralation between Philip Morris and YY
Allowing for the 90-day total investment horizon Philip Morris International is expected to generate 0.47 times more return on investment than YY. However, Philip Morris International is 2.14 times less risky than YY. It trades about 0.11 of its potential returns per unit of risk. YY Inc Class is currently generating about 0.02 per unit of risk. If you would invest 9,041 in Philip Morris International on February 6, 2024 and sell it today you would earn a total of 676.00 from holding Philip Morris International or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Philip Morris International vs. YY Inc Class
Performance |
| Timeline |
| Philip Morris Intern |
| YY Inc Class |
Philip Morris and YY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and YY
The main advantage of trading using opposite Philip Morris and YY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, YY can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in YY will offset losses from the drop in YY's long position.| Philip Morris vs. Green Cures Botanical | Philip Morris vs. Easton Pharmaceutica | Philip Morris vs. Rocky Mountain High | Philip Morris vs. American Green |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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